INTERNATIONAL FINANCE MULTIPLE CHOICE QUESTIONS

INTERNATIONAL FINANCE

MULTIPLE CHOICE QUESTIONS:

1. The world’s major trading currencies, which are a free to float against each other,

include all of the following except__________________

a) British Pound

b) Japanese Yen

c) US Dollar

d) Spanish Peso

Ans – d) Spanish Peso

2. National that have major economic expansion attract _____________________

a) Imports

b) Exports

c) FDI

d) Privatization

Ans – c) FDI

3. IMF stands for ____________

a) International Monetary Fund

b) Indian Monetary Fund

c) International Monetary Finance

d) Indian Monetary Finance

Ans -International Monetary Fund

4. In the foreign exchange market, the _______________ of one country is traded for the

________________of another country.

a) Currency, Currency

b) Currency, Financial instruments

c) Currency goods

d) Goods Goods

Ans -a) Currency Current

5. Systematic record of economic transaction of a country during a given period of time is

_______________--

a) ADR

b) BOP

c) GDR

d) IFRS

Ans – b) BOP

6. Funs based services includes all of the following except _______________-

a) Bill discounting

b) Factoring

c) Lease Financing

d) M & A Services

Ans -d) M & A Services

7. _________ deals with the global rules of trade between nations.

a) WTO

b) IFC

c) IBRD

d) World Bank

Ans -a) WTO

8. Exchange rate is the __________________

a) Opportunity cost at which goods are produced domestically

b) Balance of trade ratio of one country to another

c) Price of one country’s currency expressed in terms of another country’s currency

d) Amount if currency that can be purchased with 1ounce of gold

Ans – C) Price of one country’s currency expressed in terms of another country’s

currency

9. Current account includes all of the following except _______________-

a) Merchandise Balance

b) Service Balance

c) FDI

d) Unilateral Transfers

Ans -C) FDI

10. Reserves are held in following forms, except __________________

a) Foreign Currency

b) Gold

c) SDR

d) Silver

Ans – d) Silver

11. Statistical residue is a part of ____________________

a) Errors and Omissions

b) Current Account

c) Capital Account

d) Reserve Account

Ans – a) Errors and Omissions

12. Difference between the value of merchandise exports and imports is

____________________

a) BOP

b) BOT

c) Capital Account

d) Official Reserve Account

Ans -b) BoT

13. Sale or purchase of gold in BOP is covered under _____________________

a) Capital Account

b) Current Account

c) Official Reserve Account

d) Balancing Items

Ans -c) Official Reserve Account

14. SDR is an international reserve asset created by_____________________

a) IMF

b) WTO

c) World Bank

d) IBRD

Ans -a) IMF

15. FDI in Bop is covered under ________________

a) Capital Account

b) Current Account

c) Official Reserve Account

d) Balancing items

Ans – a) Capital Account

16. FDI Stands for _____________

a) Foreign Direct Intermediation

b) Foreign Domestic Investment

c) Foreign Direct Investment

d) Foreign direct Investment

Ans -d) Foreign Direct Investment

17. Bretton woods is a town in _________________ in US

a) Boston

b) Seattle

c) Hampshire

d) Denver

Ans -c) Hampshire

18. G -10 Countries included all of the following, except ____________

a) Belgium

b) Canada

c) France

d) China

Ans -d) China

19. Under _______ monetary unit is associated with the value of circulating gold coins.

a) Gold Specie

b) Gold Exchange

c) Gold Bullion

d) Silver

Ans – a) Gold Specie

20. Under ____________ there is no interference of monetary authorities to decide

exchange rate.

a) Fixed

b) Floating

c) Both of these

d) Fixing

Ans -b) Floating

21. In Smithsonian Agreement, the variation zone was increased from 1% to

____________ %’

a) 2.25

b) 2.5

c) 2.15

d) 2.35

Ans -a) 2.25%

22. In ____________ president Nixon announced that dollar would no longer be

convertible into gold.

a) 1944

b) 1945

c) 1970

d) 1971

Ans -d) 1971

23. During BWS, value of USD was fixed at 1-ounce gold is equal to

USD______________

a) 25

b) 30

c) 45

d) 35

Ans -d) 35

24. Euro is official currency of _____ member states.

a) 25

b) 28

c) 19

d) 18

Ans -c) 19

25. In Spot market, exchange of currencies take place on ___________

a) T +1

b) T+2

c) T+0

d) T+4

Ans -b) T +2

26. An account which is held within a domestic country by a foreign bank, in the currency

of domestic

country _________________

a) Loro

b) Nostro

c) Vostro

d) SWIFT

Ans -c) Vostro

27. SBI Account with HSBC in Uk is an example of ___________

a) Loro

b) Nostro

c) Vostro

d) SWIFT

Ans -b) Nostro

28. Spot rate is also called as ________________

a) Future Price

b) Forward Price

c) Swap Price

d) Current Market Price

Ans – d) Current Market Price

29. Inverse quote for “1GBP = 99.1100/9900 INR is INR GBP____________

a) 0.0101/0.0100

b) 0.0100/0.0105

c) 0.0105/0.0100

d) 0.0100/0.0101

Ans -d) 0.0100/0.0101

30. If USD SGD 1.5423/33; SGD GBP 0.3323/33; GBP USD quotation is

__________________

a) 1.9512/444

b) 1.9441/512

c) 1.9444/512

d) 1.9512/441

Ans -b) 1.9441/512

31. Inverse quote for USD / DKK 5.7935 – 5.8085 is _________________

a) DKK /USD 0.1722-0.1726

b) USD / DKK 0.1722-0.1726

c) DKK / USD 0.1726-0.1722

d) USD / DKK 0.1726-0.1722

Ans -a) DKK /USD 0.1722-0.1726

32. Holgate principle, if bid > Ask, Swap points for forward rate are to be_________

a) Added

b) Subtracted

c) Multiplied

d) Divided

Ans – b) Subtracted

33. _________ is the smallest unit by which a currency quotation can change.

a) PIP

b) Bid

c) Ask

d) Spread

Ans – a) PIP

34. _________ deal in currencies to benefit from movements in currency exchange

markets.

a) Arbitrageurs

b) Hedgers

c) Speculators

d) Spread

Ans -c) Speculators

35. Currently the largest foreign exchange market in the world is ____________-.

a) New York

b) Tokyo

c) Frankfurt

d) London

Ans -d) London

36. __________ is real time gross settlement funds transfer system operated by the United

states Federal reserve banks.

a) Swift

b) Chips

c) Chaps

d) Fedwire

Ans -d) Fedwire

37. Spot used INR 60- and six-months forward is USD INR 61.AFM is ____________

a) 3.33%

b) 1.13%

c) 2.33%

d) 4.33%

Ans -a) 3.33%

38. SWIFT stands for ____________

a) System of World Interbank Financial Transportation

b) Society wide interest & financial telecommunications

c) Society for worldwide interbank Financial transportation

d) Society for Worldwide interbank Financial Transportation.

Ans-c) society for worldwide interbank Financial Transportation

39. _________ is market where foreign currencies are bought and sold.

a) Stock Market

b) Forex Market

c) Capital Market

d) Debt Market

Ans -c) Capital Market

40. _________ theory states that the exchange rate between currencies of two countries

should be equal to the ratio of the countries price levels.

a) IRP

b) PPP

c) Fisher`s

d) T Bills

Ans -b) PPP

41. Money market instruments include all the following, except _____________

a) Commercial papers

b) T -Bills

c) Certificate of Deposit

d) Equity shares

Ans -d) Equity Shares

42. In Quote of 1$ = Rs.61, __________ is a home country.

a) India

b) US

c) France

d) Australia

Ans -a) India

43. If USD /CAD 1.1630, 3 months forward 1. 1675.Annualized interest rate CAD 6%,

USD 4%. Arbitrage gain will be_____________

a) 0

b) 1078

c) 1087

d) 1870

Ans -c) 1087

44. PPP theory ____________government intervention.

a) Ignores

b) Includes

c) Requires

d) Fishers

Ans -a) Ignores

45. ________ theory states that exchange rate between two currencies is directly affected

by their interest rates.

a) IRP

b) PPP

c) Fisher`s

d) Home Foreign

Ans – c) Fishers

46. If formula I of Fishers effect is positive, Borrow ___________ , invest __________.

a) Foreign, Home

b) Foreign, Foreign

c) Home, Home

d) Home Foreign

Ans -d) Home Foreign

47. __________ is a standardized contract to exchange one currency for another at a special

date in the future at a price (exchange rate) that is fixed on the purchase date.

a) Futures Contract

b) Options Contract

c) Swaps

d) Forward contract

Ans -a) Future Contract

48. The _______ requires that an upfront margin to trade on an exchange.

a) Currency forwards

b) Currency options

c) Currency FTF`s

d) Currency Futures

Ans -d) Currency futures

49. Which of the following is false ________

a) Futures contracts trade on a financial exchange

b) Futures contracts are more liquid than forward contracts

c) Futures contracts are marked to market

d) Futures contracts allow fewer delivery options than forward contracts

Ans -b) Futures contracts are more liquid than forward contracts

50. Which of the following does the most to reduce default risk for futures

contracts_________

a) High liquidity

b) Flexible delivery arrangements

c) Marking to market

d) Credit checks for both buyers and sellers

Ans -c) Marketing to market

51. Foreign currency forward market is ___________

a) An over the counter unorganized market

b) Organized market without trading

c) Organized listed market

d) Unauthorized listed market

Ans – a) An over the counter unorganized market

52. Which of the following financial instruments is primarily used to transfer risk

_____________

a) Bonds

b) Home Mortgages

c) Futures Contract

d) Stocks

Ans -c) Futures Contract

53. An option giving the buyer of the option the right but not the obligation to buy a

currency is _____________

a) Call option

b) Put option

c) Forward option

d) Future option

Ans -a) Call option

UNIT III

54. Regulation _________ of federal Reserve Act imposed a ceiling on interest rates that

could be paid on deposits by Banks in the US.

a) P

b) Q

c) R

d) M

Ans -b) Q

55. __________ bond is issued in a local market by a foreign borrower, denominated in

local currency.

a) Foreign

b) Euro

c) Domestic

d) Euro Credit

Ans -a) Foreign

56. ___________ once issued bonds with coupon rates tied to its financial performance.

a) Electrolux

b) Wait Disney

c) Japan

d) Infosys

Ans -b) Wait Disney

57. ______________ is type of security listed on Luxembourg.

a) ADR

b) GDR

c) IDR

d) CDR

Ans – b) GDR

58. Level _________ ADR `s must comply with various SEC rule, including full

registration and reporting requirements of SEC.

a) I

b) II

c) III

d) IV

Ans – c) III

59. ADR `s are dominated in _______ currency.

a) US $

b) Euro

c) GBP

d) INR

Ans – a) US $

60. In ADR and GDR process, _______ issues the depository Receipts in Foreign Markets.

a) Custodian bank

b) Depository Bank

c) Issuing Company

d) Lead manager

Ans – b) Depository bank

61. The Dow Jones Industrial Average (DJIA) contains _________ of the largest and most

influential companies

(blue chip companies) is the US__________

a) 35

b) 25

c) 40

d) 30

Ans -d) 30

62. Required Return from an investment =____________

a) Risk free return + Risk premium

b) Risk free Return – Risk Premium

c) Risk free return x Risk premium

d) Risk free Return / Risk Premium

Ans- a) Risk free return + Risk Premium

63. IPO stands for ____________

a) Indian Profit Organization

b) Investment and Public Offering

c) Initial Public Offering

d) Initial Prospectus Offering

Ans – c) Initial Prospectus Offering

64. An unsponsored ADR, __________

a) Complies with regulatory reporting

b) Is listed on International stock exchanges

c) Trades in OTC market

d) Is issued by a bank on behalf of foreign company whose equity serves as underlying

asset

Ans – c) Trades in OTC Market

65. ________ was introduced at a time when forex reserves of the country were low.

a) FERA

b) FEMA

c) GATT

d) IMF

Ans- a) FERA

66. As per FEMA, no person, other than ________ would enter in any transactions of the

foreign currency.

a) Offshore banks

b) Parliament

c) Government

d) Authorized Dealer

Ans – d) Authorized dealer

67. The monetary penalty payable under FERA was nearly ___________times the amount

involved.

a) Three

b) Five

c) Two

d) Six

Ans -b) Five

68. __________ implies investment made with an intent of obtaining an ownership stake in

an enterprise domiciled in a country by an enterprise situated in some other country.

a) FDI

b) FPI

c) Two

d) Six

Ans -b) Five

69. RBI has granted license to certain established firms, hotels and other organizations

permitting them to deal in foreign currency notes, coins and travelers’ cheques. They

are termed as ___________

a) Authorized Banks

b) Authorized Dealers

c) Authorized Money changers

d) Authorized shopkeeper

Ans -c) Authorized Money changers

70. FEDAI stands for _____________

a) Foreign Exchange dealers act of India

b) Foreign Exchange direct association of India

c) Foreign exchange dealers association Index

d) Foreign exchange dealers association of India

Ans -d) Foreign exchange dealers association of India

71. ____________ can authorize a person / company to deal in foreign exchange.

a) SEBI

b) RBI

c) IRDA

d) Parliament

Ans -b) RBI

72. __________ is the process of analyzing and ranking proposed projects to determine

which ones deserving of an investment.

a) IPO

b) Debt financing

c) Capital Budgeting

d) Budgeting

Ans – c) Capital budgeting

73. Walmart opening a new retail outlet is an example of _______________ project.

a) Expansion

b) Regulatory

c) Replacement

d) R & D

Ans -a) Expansion

74. Net amount of all cash flowing in and out of the business, from all sources is

____________ cash flow.

a) Incremental

b) Total

c) Terminal

d) Capital budgeting

Ans – b) Total

75. _________ are the initial outlays required to analyse a project that cannot be recovered

even if a project is accepted.

a) Opportunity cost

b) Externally

c) Cannibalization

d) Sunk cost

Ans -d) Sunk cost

76. ___________ means transfer of corporate money from a foreign country back to its

home country.

a) Repatriation

b) Capital Budgeting

c) Withholding

d) Holding

Ans- a) Repatriation

77. Lower the better applies to ___________ capital budgeting method.

a) NPV

b) Payback period

c) IRR

d) Profitability Index

Ans -b) payback period

78. Formula of profitability index is ___________

a) PV of cash inflow / PV of cash outlay

b) Pv of cash inflow – PV of cash outlay

c) PV of cash inflow + Pv of cash outlay

d) PV of cash outlay / PV of cash inflow

Ans -a) PV of cash inflow / PV of cash outlay

79. __________ monitors the balance of payments of its member nations.

a) World Bank

b) IMF

c) WTO

d) IFC

Ans -b) IMF

80. ________ deals with the global rules of trade between nations.

a) WTO

b) IFC

c) World Bank

d) IMF

Ans – a) WTO

81. _________ supporters’ sustainable investments in the private sector.

a) IFC

b) World Bank

c) IMF

d) WTO

Ans -a) IFC

82. _____________ includes risk of loss from uniform political and government issues.

a) Political Risk

b) International Finance

c) Imperfect Market

d) Foreign Exchange risk

Ans-a) Political Risk

83. Due to imperfection in markets ___________ are restricted by a limit to invest and

manage their portfolio.

a) Investors

b) Creditors

c) Debtors

d) Consumers

Ans -a) Investors

84. ____________ to promote domestic investment and growth through capital Market.

a) International Finance

b) World Bank

c) WTO

d) IFC

Ans –a) International Finance

85. _________ it increases in flow of capital and investment to developing economics.

a) Globalization

b) Privatization

c) Liberalization

d) Balance of payment

Ans -a) Globalization

86. ________ control over the monetary system of India.

a) RBI

b) IFC

c) IMF

d) WTO

Ans -a) RBI

87. _________ records all international transactions that involve creation of assets and

liabilities in foreign currencies.

a) Capital Account

b) Reserve Account

c) Current Accountant

d) Saving Account

Ans- a) Capital Account

88. _____________ leads to increasingly the standard of living of developing economics.

a) Privatization

b) Globalization

c) Liberalization

d) Bank of Trade

Ans- b) Globalization

89. __________ also relates to international assets and liabilities for such transactions which

the country’s monetary authorities use to such transactions which the country’s monetary

authorities use to settle the deficits and surpluses.

a) Reserve Account

b) Capital Account

c) Saving Account

d) Current Account

Ans -a) Reserve Account

90. ___________is a statistical residence.

a) Balance of payment

b) Balance of Trade

c) Omissions

d) Errors and omissions

Ans -d) Errors and omissions

91. Difference between except and import of goods and services______________.

a) Balance of Trade

b) Balance of Payment

c) Capital Account

d) Profit

Ans -a) Balance of Trade

92. Balance of Trade =Net earnings on exports ___________

a) Net payment of Import

b) Net payment of export

c) Cost of Goods Sold

d) Income Tax

Ans -a) Net payment of Import

93. Balance of Trade is a _________ concept.

a) Wider

b) Small

c) Narrow

d) Favorable

Ans -c) Narrow

94. BOP Stands for ___________

a) Balance of Profit

b) Balance of Payment

c) Balance of Positive impact

d) Balance of Profit in Trade

Ans -b) balance of Payment

95. balance of payment = Current Account + balancing Item _____________

a) Saving Account

b) Fixed Deposit Account

c) Capital Account

d) Reserve Account

Ans -c) Capital Account

96. Balance of payment Identity equation ______________

a) FA + RA + CA =0

b) RA + CA+ FA = 0

c) CA + FA+ RA = 0

d) CA + FA = 0

Ans – c) CA +FA+RA =0

97. Balance of payment is a statement that records all __________ transactions between a

country and the rest of the world.

a) Goods

b) Cash

c) Credit

d) Monetary

Ans -d) Monetary

98. IIP is a subset of the national _____________

a) Statement

b) Profit and Loan Account

c) Balance sheet

d) Financial Asset and Liability

Ans -c) balance sheet

99 . ___________ was the first university implemented system for valuing currencies.

a) Gold Exchange

b) Gold Standard

c) Silver Coin

d) Bullions

Ans – b) Gold Standard

100. International Monetary fund which was given the task of implementing and monitoring

the__________

a) BWS

b) IBRD

c) Nixon Stock

d) BSW

Ans -a) BWS

101. BWS came into effect in July______________

a) 1939

b) 1945

c) 1944

d) 1970

Ans -c) 1944

102. EURO is single currency of the European Monetary Union adopted on _______________

a) January 1,1999

b) January 1, 2000

c) January 1, 1997

d) January 1 1996

Ans –a) January 1, 1999

103. __________ supports sustainable investments in the private sector in developing countries.

a) IFC

b) IMF

c) World Bank

d) RBI

Ans – a) IFC

104. Foreign Investment are recorded in the _________ of balance of payments.

a) Current Account

b) Saving Account

c) Capital Account

d) Fixed Deposit Account

Ans- c) Capital Account

105. ___________ is widely used by Government for formulating policies for economy.

a) BOP

b) BOT

c) FDI

d) SDR

Ans -a) BOP

106. Under gold standard system, countries gold reserves were required to be in custody of

_________

a) Swiss Bank

b) Central Bank

c) Foreign Bank

d) Reserve Bank

Ans- b) Central Bank

107. ________ is also known as price quotation.

a) Direct Quote

b) Indirect Quote

c) Spot Quote

d) Spread Quote

Ans -a) Direct Quote

108. _________ is also known as price Quantity Quote.

a) Forward Quote

b) Indirect Quote

c) Spot Quote

d) Spread Quote

Ans- b) Indirect Quote

109. _____ is todays quote.

a) Spot Quote

b) Forward Quote

c) Inter Bank Quote

d) Mid Quote

Ans -a) Spot Quote

110. ___________ is also known as Bid office spread.

a) Direct Quote

b) Mid Quote

c) Spread Quote

d) Cross Currency Quote

Ans -c) Spread Quote

111. ___________ is also known as reference rate.

a) Interbank Quote

b) Cross Currency Quote

c) Mid Quote

d) Bid and Ask Quote

Ans- c) Mid Quote

112. Price of _________-- currency in terms of national currency.

a) Home

b) Foreign

c) National

d) Direct Rate

Ans -b) Foreign

113. US Dollar serves as a _________ Currency.

a) Vehicle

b) Foreign

c) National

d) Forex Market

Ans -a) Vehicle

114. Bid rate is lesser than _____________ rate.

a) Inverse

b) Ask

c) Cross

d) Foreign

Ans -b) Ask

115. If two banks are quoting the following GBP rates: Bank A: Rs.78.9810-79.1110 and

Bank B: Rs.79.0110-19.2350. The arbitrage opportunity will be _________________

a) 100

b) 0

c) 124

d) 142

Ans -b) 0

116. If Quote of Bank ABC is EUR INR 68.00 /30 and Quote of Bank PQR is INR EUR

1.4550/1.4600, arbitrage opportunity will be ___________-

a) 2828

b) 0

c) 2882

d) 2288

Ans -a) 2828

117. Effect of falling domestic exchange rate ___________

a) Reduces Profitability for importers

b) Increases Profitability for importers

c) Exposure

d) Economic

Ans -a) reduces profitability for importers

118. ___________ refers to the size or scope of potential loss.

a) Risk

b) Uncertainty

c) Exposure

d) Transaction

Ans – c) Exposure

119. ____________ risk is also called as “According Exposure”.

a) Transaction

b) Economic

c) Translation

d) Exposure

Ans -c) Translation

120. Internal techniques of managing forex risk includes all of the following, except

_______________

a) Leading and Lagging

b) Matching

c) Split Currency invoicing

d) Forward and Future contracts

Ans -d) Forward and Future Contracts

121. When a company has receipts and payments in the same foreign currency due at the

same time, it can use ___________technique of managing forex risk.

a) Risk Sharing Agreement

b) Lagging

c) Leading

d) Matching

Ans -d) matching

122. _________ is a tax levied on passive income earned by an individua; or corporation of

one country within the tax jurisdiction of another country.

a) Income Tax

b) Withholding Tax

c) Value added tax

d) Poll Tax

Ans -b) Withholding Tax

123. ____________ is also known as secrecy jurisdiction.

a) Tax haven

b) Transfer Pricing

c) Foreign affiliate

d) Tax

Ans -a) Tax haven

124. A strategy used to reduce tax liabilities by pricing goods and services within a group

structure in way that it does not reflect the arm’s length transaction_______________.

a) Thin Capitalization

b) Repatriating Profits

c) Transfer Pricing

d) Tax haven

Ans -c) Transfer Pricing

125. ____________ is a Tax avoidance technique whereby multinational subsidiaries are

financed primarily by debt from the parent company instead of equity capital.

a) Thin Capitalization

b) Repatriating Profits

c) Transfer Pricing

d) Tax haven

Ans -a) Thin Capitalization

126. International Finance is an important tool

a. To find the exchange rate

b. Compare Inflation Rates

c. Get an idea about international investment

d. All of the above

127. IFRS stands for

a. International Financial Recognition Standards

b. International Foreign Reporting Standards

c. International Financial Reporting Solutions

d. International Financial Reporting Standards

128. Scope of International Finance includes

a. International Financial Economics

b. International Financial Management

c. International Financial Markets

d. All the above

129. ----- is the economic position of the country compared with rest of the World

a. Balance of Payment

b. Balance of Trade

c. Autonomous Transaction

d. Visible Account

130. ------- records Import & Export of goods


b. Balance of Trade

c. Autonomous Transaction

d. Visible Account

131. ------ records Import & Export of services


b. Visible Account

c. Invisible Account

d. Unilateral Accounts

132. Gifts & donations are example of ----------

a. Balance of Payment b. Visible Account

c. Invisible Account d. Unilateral Accounts

133. Conversion of monetary gold into commodity gold

a. Monetization

b. De-monetization

c. Reserve account

d. Balance of Payment

134. ------ records FDI & FPI transactions

a. Current Account

b. Capital Account

c. Savings Account

d. Reserve Account

135. ------- always balances

a. Monetization

b. De-monetization

c. Reserve account

d. Balance of Payment

136. ------- is the oldest system of exchange rate

a. Currency Basket system

b. Currency Board system

c. Gold Standard

d. Bretton woods

137. Gold Standard Originated in

a. USA

b. Smithsonian

c. Bank of England

d. New Hemisphere

138. Mechanism of calculating exchange rate under Gold Standard


b. Currency Board System

c. Mint Par of exchange

d. Par value mechanism

139. Bretton wood system

originated in A. 1944

B. 1948

C. 1973

D. 1964

140. Under Bretton wood system one ounce of gold is equal to --------

a. 35 USD

b. 38 USD

c. 36 USD

d. 42 USD

141. Bretton wood system is also known as

a. Fixed exchange system

b. Adjustable Peg system

c. Crawling Peg system

d. Concerted Intervention

142. ------ predicted the failure of Bretton wood system

a. Nixon

b. Smith Sonian

c. Triffin

d. Trump

143. ------ is the variation zone in Bretton wood system

A. + or - 1 %

B. + or – 2.25 %

C. + or – 10%

D. + or – 1.5%

144. Mechanism of calculating exchange rate under Bretton wood system is called


b. Currency Board System

c. Mint Par of exchange

d. Par value mechanism

145. ---------------- Under system exchange rates are determined by Central Bank

a. Bretton Wood system

b. Fixed exchange system

c. Adjustable Peg system

d. Crawling Peg system

146. ---------------- Under system exchange rates are determined by market forces

a. Flexible exchange rate system




147. In India RBI follows system of Exchange rate

a. Clean Float

b. Managed Float

c. Hard peg

d. Currency basket

148. Under system of exchange rate, it is influenced by inflation rates.

a. Flexible exchange rate system




149. Reserves are held in following forms except

a. Foreign Currency

b. SDR

c. Silver

d. Gold

150. Artificial currency created by IMF

a. USD

b. GBP

c. EURO

d. SDR

151. is known as paper gold

a. USD

b. GBP

c. EURO

d. SDR

152. Under there is central bank intervention to decide the exchange rate

a. Clean float

b. Dirty Float

c. Currency Basket

d. Currency Board

153. SBI A/C with HSBC in UK is an example of

a. Nostro

b. Vostro

c. Loro

d. Mirror Account

154. Latin word means our Account with you

a. Nostro

b. Vostro

c. Loro

d. Mirror Account

155. Latin word means your account with us

a. Nostro

b. Vostro

c. Loro

d. Mirror Account

156. Latin word speaks about a 3rd party foreign currency account

a. Nostro

b. Vostro

c. Loro

d. Mirror Account

157. USD/INR=68.1610/68.1615, which country it is Direct Quote

a. India

b. USA

c. UK

d. Both USA and India

158 .1USD =CAD 1.1630/1.1650, which is the variable currency in this quote

A. US DOLLAR

B. CANADIAN DOLLAR

C. CHINESE YUAN

D. DIRHAM

159. 1GBP=USD 1.7412/1.7418, which is the Base currency in this quote

a. POUND STERLING

b. USD DOLLAR

c. GUYANAESE DOLLAR

d. GAMBIAN DALASI

160. AED/INR 16.4231/16.4240, what is the bid rate A.

16.4231

B. 16.4240

C. 32.8471

D. 0.00099

161. In a quote exchange rate, the currency that is to purchase with another currency is

called

a. Liquid Currency

b. Foreign Currency

c. Local Currency

d. Base Currency

162. is the 4th decimal place in a Forex quote

A. Points

B. Pips

C. PPP

D. IRP

163. is the 5th decimal place in a Foreign exchange quote

E. Points

F. Pips

G. PPP

H. IRP

164. Ask rate is determined by the following formula

A. Midrate – (spread/2)

B. Midrate + (spread/2)

C. Midrate * (spread/2)

D. Midrate / (spread/2)

165. Bid rate is determined by the following formula

E. Midrate – (spread/2)

F. Midrate + (spread/2)

G. Midrate * (spread/2)

H. Midrate/ (spread/2)

166. The difference between Ask rate & Bid rate is called

I. Pips

J. Points

K. Cross Rate

L. Spread

167. As per the concept of snake the variation zone widened to

A. + or - 1 %

B. + or – 2.25 %

C. + or – 10%

D. + or – 1.5%

168. A Foreign exchange market in which delivery takes place within two days of

the execution of the contract

M. Cash Market

N. Spot Market

O. Tom Market

P. Forward Market

169. Re. 1 = SW.KR 0.2055 is a direct quote in

A. India

B. Switzerland

C. Sweden

D. Singapore

170. CHF is the currency of --------

A. India

B. Switzerland

C. Sweden

D. Singapore

171. AED/INR 16.4231/16.4240, what is the

mid-rate A. 16.4231

B. 16.4240

C. 16.4236

D. 16.4271

172. EUR/INR 82.5125/82.5135, its spread is equal to

A. 0.001

B. 0.0001

C. 0.0010

D. 0.1010

173. USD/CAD = 1.1630/1.1650, what is the inverse

quote A. USD/CAD = 0.8584/0.8598

B. CAD/USD = 0.8584/0.8598

C. USD/CAD = 0.8598/0.8584

D. CAD/USD = 0.8598/0.8584

174. GBP/SEK mid-rate = 2.3477, spread = 0.0018, %

spread = A. 0.0766%

B. 1.3042%

C. 0.0018%

D. 0.2344%

175. Closing of gold convertibility window without consulting member

countries of Bretton Woods

Q. Triffin Paradox

R. Smithsonian agreement

S. Nixon Shock

T. SDR

176. is the market for exchanging one currency for another

A. Debt Market

B. Equity Market

C. Forex Market

D. Commodity Market

177. is the market for foreign currencies

A. Debt Market

B. Equity Market

C. Forex Market

D. Commodity Market

178. is viewed as money only in the country of issue, all other countries it is

viewed as commodity

A. Foreign Currency

B. Bonds

C. GDR

D. Promissory Note

179. Controller of Foreign Exchange Market

A. SEBI

B. PFRDA

C. IRDAI

D. RBI

180. is the Association of Authorized Dealers

A. FERA

B. FEMA

C. FEDAI

D. AMFI

181. In Holgate Principal if bid < ask, swap points for forward rates would be

A. Added

B. Subtracted

C. Multiplied

D. Divided

182. In Holgate Principal if bid > ask, swap points for forward rates would be

A. Added

B. Subtracted

C. Multiplied

D. Divided

183. ---- deal in currencies to benefit from movements in currency exchange

market

A. Arbitrageurs

B. Hedgers

C. Speculators

D. None of the above

184. ---- is the smallest unit by which a currency quotation can change

A. Pip

B. Bid

C. Ask

D. Spread

185. Currently the largest exchange market in the world

A. New York

B. Tokyo

C. Frankfurt

D. London

186. ----- is the RTGS fund transfer system of United States Federal Reserve

Bank

A. SWIFT

B. CHIPS

C. CHAPS

D. FEDWIRE

187. ----- theory states that the exchange rate between currencies of two

countries should be equal to the ratio of countries price levels

A. IRP

B. PPP

C. FISHER


188. Money market instrument include all the following except ------

A. Commercial Paper

B. Treasury Bills

C. Certificate of deposit

D. Equity Share

189. ---------------------------------------- In quote of 1 $ = 73 rupee, is the home country

A. India

B. USA

C. France

D. Canada

190. ---- theory states that the % change in spot exchange rate over time is

governed by the difference between the nominal interest rate for the two

currencies

A. IRP

B. PPP

C. FISHER


191. If premium < interest borrow ------, invest ------

A. Foreign, home

B. Foreign, foreign

C. Home. Home

D. Home, Foreign

192. If premium > interest borrow ------, invest ------

A. Foreign, home

B. Foreign, foreign

C. Home, home

D. Home, foreign

193. The option contract for buying is called -----

A. Call option

B. Put option

C. Double option

D. Swaption

194. The option contract for selling is called -----

A. Call option

B. Put option

C. Double option

D. Swaption

195. The option contract for both buying and selling is called

A. Call option

B. Put option

C. Double option

D. Swaption

196.Standardised forwards are called

A. Futures

B. Forwards

C. Options

D. Swaps

197. is the founder of PPP theory

A. Gustav Cassel.

B. Sharpe

C. William Treynor

D. Fisher Irvis

198. is not Authorised person

A. Authorised Dealers

B. Authorised Money Changers

C. Offshore Banking Units

D. Public

199 of Federal Reserve Act imposed a ceiling on interest rates that could be paid

on deposits by banks in the US

a. Regulation P

b. Regulation Q

c. Regulation R

d. Regulation M

200 bond is issued in local market by a Foreign borrower denominated in local

currency

a. Foreign

b. Euro

c. Domestic

d. Euro Credit

201 High risk bonds are called -------

A. Zero coupon bonds

B. Convertible bonds

C. Deep discount bonds

D. Jung bonds

202 bonds are issued locally by a domestic borrower, usually denominated

in local currency

E. Foreign

F. Euro

G. Domestic

H. Euro Credit

203 was introduced at a time when forex reserves of the country were low

I. FERA

J. FEMA

K. GATT

L. None of the above.

204 As per FEMA, no person, other than

would enter in any transactions of the

foreign currency.

M. Offshore banks

N. Parliament

O. Government

P. Authorized Dealers

205 The monetary

penalty payable under FERA, was nearly times the amount

involved

Q. Three

R. Five

S. Two

T. Six

206 implies an investment made with an intent of obtaining an ownership

stake in an enterprise domiciled in a country by an enterprise situated in some

other country.

U. FDI

V. FPI

W. Both

X. None

207 RBI has granted licenses to certain established firms, hotels and other

organisations permitting them to deal in foreign currency notes, coins and

travellers cheques. They are called

Y. Authorised Dealers

Z. Authorised Persons

AA. Authorised Money changers

BB. None of the above

208 FEDAI stands for

CC. Foreign Exchange Dealers Act of India

DD. Foreign Exchange Dealers Association of India

EE. Foreign Exchange Dealers Association Index

FF.Foreign Exchange Direct Association of India

209 authorize a person/company to deal in foreign exchange.

GG. SEBI

HH. RBI

II. IRDAI

JJ. Parliament

210 Forex includes all of the following except

KK. Student studying abroad

LL. Tourist

MM. Employee working in a foreign company

NN. None of these

211 is a type of security listed on Luxemburg

OO. ADR

PP. GDR

QQ. IDR

RR. All of these

212 Level ADR’s must comply with various SEC rule, including full registration

and reporting requirements of SEC

SS. One

TT.Two

UU. Three

VV. Restricted

213 ADR’s are denominated in

WW. USD

XX. Euro

YY. GBP

ZZ.INR

214 In ADR/GDR process, issues the Depository Receipts in

foreign Markets

AAA. Custodian Bank

BBB. Depository Bank

CCC. Issuing Company

DDD. Lead Manager

215 IDR needs to be registered with

EEE. RBI

FFF. SEBI

GGG. IRDAI

HHH. Parliament

216 IDR is denominated in

III. USD

JJJ. Euro

KKK. GBP

LLL. INR

217 refers to simple deposit and lending function of a third country

currency in Euro Bank.

MMM. Euro bonds

NNN. Euro Credits

OOO. Euro Commercial Paper

PPP. Euro Certificate of Deposit

218. An Indian Corporate house floating bond denominated in terms of YEN

in London.

A. Euro bonds

B. Euro Credits

C. Euro Commercial Paper

D. Euro Certificate of Deposit

219. of the Federal Reserve Act which stipulated reserves to be

maintained against deposits by banks in the US

a. Regulation P

b. Regulation Q

c. Regulation R

d. Regulation M

220. A loan whose denominated currency is not the lending bank’s national currency.

a. Euro bonds

b. Euro Credits

c. Euro Commercial Paper

d. Euro Certificate of Deposit

221. are time deposits denominated in US Dollars at banks outside the US,

and thus are not under the jurisdiction of the Federal Reserve.

a. Euro bonds

b. Euro Dollars

c. Euro Commercial Paper

d. Euro Certificate of Deposit

222. are Euro bonds with Fixed Coupon Rate

a. FRN

b. Straight Bonds

c. Deep Discount

d. Sinking Fund

223. bonds do not have interest payments. The investor may looking for

some tax advantage.

a. Zero Coupon bonds

b. Deep Discount bonds

c. Straight bonds

d. Floating bonds

224. is a bond with variable interest rate.

a. FRN

b. Straight Bonds

c. Deep Discount

d. Sinking Fund

225. is a negotiable financial instrument issued by a bank to represent a

foreign company’s publicly traded securities.

a. Depository Receipts

b. Shares

c. Bonds

d. Debentures

226. refers to the investment made by the foreign investors to

obtain a substantial interest in the enterprise located in a different

country.

a. FERA

b. FEMA

c. FDI

d. FPI

227. investment made by an international investor, in the passive holdings

of an enterprise of another country.

a. FERA

b. FEMA

c. FDI

d. FPI

228. is a negotiable instrument issued by the international depository

bank, representing foreign company’s stock trading globally.

a. GDR

b. ADR

c. IDR

d. EDR

229. ADR/GDR allows the investors to hold share in foreign companies without

bothering about their accounting practice, laws or any other rules.

A. GDR

B. ADR

C. BOTH GDR and ADR


230. allow foreign companies to mobilise funds from Indian Markets

A. GDR

B. ADR

C. EDR

D. IDR

231. SEBI has set as lower limit for the IDRs to be issued by the Indian

Companies.

A. 5 Crore

B. 50 Crore

C. 500 crore

D. 5000 Crore

232. The minimum investment required in the IDR issue by the Investors has been fixed

at by SEBI

A. Rs. 2 Lakhs

B. Rs. 5 Lakhs

C. Rs. 20 Lakhs

D. Rs. 50 Lakhs

233. does not impose any limit to the buyer and thus one is privileged to buy as many

stocks of any foreign company.

A. GDR

B. ADR

C. Both A and B


234. bonds issued locally by a domestic borrower usually denominated in the local

currency.

A. Domestic Bonds

B. Foreign Bonds

C. Euro Bonds

D. Government Bonds

235. are bonds issued in a local market by a foreign borrower usually

denominated in local currency.

A. Domestic Bonds

B. Foreign Bonds

C. Euro Bonds

D. Government Bonds

236. bonds are placed mainly in countries other than the one in whose

currency the bond is denominated.

A. Domestic Bonds

B. Foreign Bonds

C. Euro Bonds

D. Government Bonds

237. bond is a mix between a debt and equity instrument.

E. Convertible Bonds

F. Foreign Bonds

G. Euro bonds

H. Domestic Bonds

238. A Japanese company issuing bonds in Yen currency in japan is an example of

A. Domestic Bonds

B. Foreign Bonds

C. Euro Bonds

D. Government Bonds

239. A Japanese company issuing USD denominated bonds in the US market is

example of

A. Domestic Bonds

B. Foreign Bonds

C. Euro Bonds

D. Government Bonds

240. A Japanese company issuing yen denominated bonds in the US market is an

example of

A. Domestic Bonds

B. Foreign Bonds

C. Euro Bonds

D. Government Bonds

241. The main risk associated with the domestic bond is

I. Bankruptcy

J. Obsolescenece

K. Exchange

L. Credit

242. Which of the following is foreign bond

M. Straight bond

N. Zero coupon bond

O. Samurai Bond

P. Junk bond

243. Which of the following is euro bond.

Q. FRN

R. Maple bonds

S. Bulldog bonds

T. Samurai bonds.

244. are instruments issued by registered FIIs to overseas investors, who wish

to invest in Indian markets without registering with SEBI.

A. Participatory Notes

B. Euro bonds

C. FCCB

D. FCEB

245. are issued by a company to non-residents giving them the choice to

convert them into shares of the same company at a fixed price.


B. Euro bonds

C. FCCB

D. FCEB

246. In the case of _ the bonds are convertible into shares not of the issuer

company, but that of another company forming part of its group.


B. Euro bonds

C. FCCB

D. FCEB

247. are issued by a company to non-residents giving them the choice to

convert them into shares of the same company at a fixed price.


B. Euro bonds

C. FCCB

D. FCEB

INTERNATIONAL FINANCE MULTIPLE CHOICE QUESTIONS

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